Buyers of russian oil in Asia have to come up with new ways to maintain supply flows. This is because an increasing number of shipowners are avoiding oil from russia in order not to face the possible consequences of sanctions.
Instead of large tankers, small ships are now used to supply oil from the russian port of Kozmino. From there the oil is transported by the waters of Yeosu in South Korea, where the cargo is transferred to supertankers for further delivery to China, writes Bloomberg.
This is an unusual process for ESPO oil, a Siberian oil brand typically loaded into small tankers for the direct five-day voyage to the PRC. Although delivery times and voyage costs are now increasing, ship brokers say the new practice is gaining widespread as ship owners and buyers prefer ready shipments in small vessels to move oil from Kozmin in small batches.
Those willing to buy russian oil receive large discounts compared to global benchmark prices since many avoid agreements with moscow because of its full-scale invasion of Ukraine.
For major consumers like China and India, the low cost of oil makes it attractive to continue supplying despite international condemnation, and logistical and financial obstacles.
Ship brokers reported that the number of ship owners and insurers willing to serve cargoes from eastern and western russia is decreasing. This has created a logistical problem for producers and buyers, as they work with fewer tankers and have to consider the best use of available ship types.
On the way to China, the big tanker was only three-quarters full.
In recent weeks, companies like Maersk have shut down their agreements with russia, while others have taken a wait-and-see stance as they fear stricter regulations and a potential oil ban from the EU.
The sixth EU sanctions package against russia, presented on May 4, has still not been adopted. Hungary is blocking the decision because it does not want to implement an oil embargo.
This week, German Economy Minister Robert Habeck said the EU expects a "breakthrough" on the russian oil embargo in the coming days.